Betting Surgery Answer

As promised, here is another item I contributed to the last issue of The Winning Report, which as far as I know has not been published. It's a Q&A from the Betting Surgery column.

Q. Betfair have just produced a list of six horses ante-post for the Fred Winter Handicap Hurdle. The odds are 16, 10, 14, 16, 15 and 20 respectively, giving a potential arb of around 45 per cent.

Am I missing something here, as it seems too good to be true if I can back all six horses at these odds for a guaranteed profit? How do supplementary entries affect this market? What would happen if all six horses do not appear at Cheltenham? Can other horses be entered in this market at any time or is it a "closed shop"? I would appreciate your views.

[Sent later] Update regarding the Fred Winter Handicap. The six runners declared have now increased to 19. Obviously no arb, but bets stand on the original six. Is there anything to stop the number of runners rising to say 40 or 50? This means the ante-post market is a waste of time. I would appreciate your comments and thoughts.

Mike Sterry, by e-mail

A. Thank you for your question. We must first of all make clear that we do not recommend horse racing for arb (risk-free) betting.

The main problem with ante-post betting, as you have discovered, is that months before a race there is no certainty that any particular horse will run. Indeed, it is not until the runners and riders are declared the night before the race that this is certain, and anyone betting prior to this risks losing their money if the horse they backed doesn’t actually compete.

You might ask why people bet in these circumstances at all, and the answer is that the odds available can be much better. Indeed, there have been one or two wondrous ‘coups’ in ante-post betting.

For example, back in 1967 the bookmakers William Hill gave race-horse owner Raymond Guest odds of 100/1 against his then-unraced colt winning the Derby the following year. Guest staked £500 each-way at this price. The horse was Sir Ivor, and he duly won the 1968 Derby under Lester Piggott at a starting price of 4/5. Guest collected total winnings of £62,500 on his ante-post bet (£50,000 on the win portion plus a further £12,500 on the place).

Betting ante-post is very much a gamble, however, and not advised for risk-free bettors unless you have top-notch ‘connections’ in the industry and/or advanced powers of clairvoyance.

Even in the (unlikely) event of an arb being available on the day of the race, bear in mind that in racing arb bettors can have their plans wrecked by Rule Four deductions, which occur when a horse is withdrawn without coming under orders. In this case a fixed percentage is deducted from all winning bets, the exact amount depending on the price of the withdrawn horse. For these and other reasons, horse-racing is not prime arb-hunting territory.

As regards Betfair, it is important to bear in mind that they do not produce the 'ante-post' market. They simply offer the facility for punters to do so. So, in the case of the Fred Winter Handicap Hurdle, we suspect that at the time Mr Sterry first looked, only six of the horses entered had prices offered about them by other punters.

This point is crucial to understand. All 'back' bets on an exchange are simply 'lays' being offered by other punters. Once a race opens up to entries, there are then declaration stages where if a horse's connections want to stay in they pay extra entry fees. If not, they withdraw the horse. Thus, any horse which doesn't have the extra entry fees paid is removed from the race.

So a race might open for entries and attract, for example, 70 horses. In the lead-up to the race 60 of these horses might be withdrawn because the connections didn't want to run (the withdrawals take place at ‘declaration stages’). The final declaration stage comes the night before the contest (two nights before for the highest grade of races). By then no further entry fees are payable, but those already paid are lost if the horse is withdrawn - as are all ante-post bets, including those on exchanges.

A betting exchange will offer the facility for ante-post betting on races where they think there will be sufficient action to make money from their commission on the winning bets or lays. With a high-profile race with 70 entries that would probably be the case, especially if it were a handicap. But exactly how many horses are available to back (being offered by other punters as 'lays') is in the lap of the gods.

This is what we think happened with the Fred Winter Handicap Hurdle. Once Betfair offered the facility for a market to be made, only six horses were initially put up by layers. This figure bore no relation to the number of runners actually entered for the race, but explains why it seemed that the number of runners later increased. It was quite simply layers on the exchange offering more and more horses to back.

Note: Many thanks to Vic Knight for his assistance in answering this question.

Note 2: See also my post Non-Runner No Bet for details of an opportunity to bet ante-post and get your money back if your horse doesn't run.